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ethicality and legailty

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Legality and Ethicality of Corporate Governance
Legality and Ethicality of Corporate Governance
United Thermostatic Controls is a publicly owned manufacturer and marketer of residential and commercial thermostats. Since it is a publicly owned company, their stock is publicly traded and sold in the New York Stock Exchange. As a result of the state of the economy, Frank Campbell, the director of the Southern sales division, was challenged to make sales revenues and was faced with potentially unethical pressures. In the fourth quarter, he was afraid of not meeting budgeted sales revenues, so he looked into purchase orders from November and December and decided to manufacture and ship the orders out before the year’s end in order to contribute those sales towards the fourth quarter.

This led to an increase in 18.6 percent above the actual sales, and went over the budget by $80,000, which led to suspicions by the internal audit committee. They questioned the $150,000 revenue that the Southern division recorded in the fourth quarter that year.

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Come to find out, the customer didn’t even want the product shipped until February of 2011 the earliest, and one of the customers got a partial shipment. Let’s discuss the legal and ethical issues, how the Sarbanes-Oxley act would apply, as well as local and state laws pertaining to this case, and see how it affected shareholders, both internal and external, and lastly, what would have been the next best step to take.
Financial statements should be accurate in order to best represent the financial health of a company. In 2002 legislature passed the Sarbanes-Oxley act (SOX) that called for more strict guidelines and for management to be more accountable for the accuracy of the financial statements, because of the cases of fraud in companies such as WorldCom and Enron. Following the suspicions of the internal audit team, the attention was directed to Tony Cupertino, Certified Public…

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ethicality and legailty. (2018, Jul 25). Retrieved from https://graduateway.com/ethicality-and-legailty/

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